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Description

Understanding twenty-first century global financial integration requires a two-part background. The Handbook of Key Global Financial Markets, Institutions, and Infrastructure begins its description of how we created a financially-intergrated world by first examining the history of financial globalization, from Roman practices and Ottoman finance to Chinese standards, the beginnings of corporate practices, and the advent of efforts to safeguard financial stability. It then describes the architecture itself by analyzing its parts, such as markets, institutions, and infrastructure. The contributions of sovereign funds, auditing regulation, loan markets, property rights, compensation practices, Islamic finance, and others to the global architecture are closely examined. For those seeking substantial, authoritative descriptions and summaries, this volume will replace books, journals, and other information sources with a single, easy-to-use reference work.

Key Features

Substantial articles by top scholars sets this volume apart from other information sources

Diverse international perspectives result in new opportunities for analysis and research

Rapidly developing subjects will interest readers well into the future

Readership

Undergraduates and graduate students worldwide working in all areas of finance and economics. Researchers will typically be examining the global aspects and implications of their particular interests.

Table of Contents

Volume 1

Section Editors for this volume

Preface

Contributors

I: Globalization of Finance: An Historical View

Chapter 1. History of Financial Globalization, Overview

References

Chapter 2. Banking Fragility, United States, 1790–2009

Introduction

Banking Fragility in Theory and in Historical Reality

US Banking Crises: 1790–1933

A Worldwide Tale of Two Banking Eras: 1875–1913 and 1978–2009

Glossary

References

Further Reading

Chapter 3. Bretton Woods and Monetary Regimes

Introduction

Types and Examples of Monetary Regimes

The Classical Gold Standard

The Interwar Years, the Gold-Exchange Standard, and the Great Depression

Bretton Woods and the Anglo-American Compromise

Conclusion

Further Reading

Chapter 4. British Corporate Finance, 1500–1860

World in 1500

Impact of the Voyages of Discovery

Emergence of the Joint-Stock Company

Rise of the Secondary Market in Shares

War Financing – State and Capital Markets

Into the Nineteenth Century

References

Chapter 5. Chinese Finance, 1348–1700

Public and Private Finance in China, 1000–1700

The Monetary System

Public Finance

Credit and Private Finance

Summary

Glossary

Further Readings

Chapter 6. Chinese Money and Monetary System, 1800–2000, Overview

A Conceptual Framework

1800–50

1850–1911

1911–30

1930–49

Acknowledgments

Glossary

References

Chapter 7. Dutch Bank Finance, 1600–1800

An Exchange Bank

The First Five Decades

Fiat Money

Monetary Policy

Eighteenth Century

Conclusion

Further Reading

Chapter 8. Dutch Corporate Finance, 1602–1850

Introduction

From Partnerships to Chartered Public Companies, 1602–1680

Branching Out, 1680–1795

New Challenges, 1795–1850

Conclusion

Further Reading

Relevant Websites

Chapter 9. The Financial Revolution in England

Introduction

The Origins of the Financial Revolution in England

The Development of the Instruments of State Debt

Controlling the Costs of Debt

The Question of Credibility

The Consequences of England’s Financial Revolution

Glossary

Further Reading

Chapter 10. Commercial Finance in Europe, 1700–1815

Introduction

The Instrument: Bills of Exchange

Sources

Mapping Commercial Finance

The Cost of Commercial Finance: Searching for Interest Rate

Conclusion

See also

References

Chapter 11. Exchanges, Rules Governing

France

Germany

Great Britain

Owners Versus Operators

United States

Further Reading

Chapter 12. French Corporate Finance, 1500–1900

Glossary

References

Chapter 13. Genoese Finance, 1348–1700

Introduction

The Origins of the Genoese Public Debt (Twelfth–Twenty-fourth Centuries)

The Birth of the Officium Comperarum Sancti Georgii

The Governance of the Office of Saint George

The Birth of the Republic of Genoa

The Banking Activity of the House of Saint George

The Genoese Exchange Fairs

The New Debt of the Republic: The Creation of the Monti

Conclusion

See also

Glossary

Further Readings

Relevant Websites

Chapter 14. The Political Economy of Global Financial Liberalization in Historical Perspective

Introduction

What Is There to Explain?

Theory

History

Conclusion

Acknowledgments

References

Chapter 15. Alexander Hamilton

Introduction

Hamilton’s Origins

War and Finance

The Confederation Interim

Secretary of the Treasury

Conclusion: The US Financial Revolution and Economic Growth

Further Reading

Chapter 16. Hanseatic Merchants and Credit, 1300–1700

Introduction

Origins of Banking in Northern Germany

Credit Instruments in the Fifteenth and Sixteenth Centuries

Immigration and Innovation

The Adaptation of Western Credit Instruments in the Baltic Trade

Conclusion

References

Chapter 17. John Law and his Experiment with France, 1715–1726

The Beginnings

The Pinnacle

The Debacle

The Impact

See also

Further Reading

Chapter 18. Low Countries Finance, 1348–1700

Introduction

Common Origins

Going Separate Ways: The Dutch Revolt

Holland’s Exceptionalism

Entering a Vicious Debt Circle

Constrained by Local Particularism: The Austrian Netherlands

Conclusion

Further Reading

Chapter 19. Milanese Finance, 1348–1700

The Viscontis and the Emergence of a Tax State (Mid-Fourteenth Century to 1447)

The Consolidation of the Government Financing System Between the Ambrosiana Republic and the Sforzas (1447–1535)

The Rise of a Fiscal State Under the Habsburgs (1535–1706)

See also

References

Chapter 20. Finance in the Ottoman Empire, 1453–1854

Introduction

Money, Credit, and Islam

Business Partnerships

Flexibility in the Monetary System

Fiscal Institutions and Public Finance

Linkages with Western European Capital Markets?

From Debasements to Bimetallism

Financing the State: The Galata Bankers

Conclusion

See also

Further Reading

Chapter 21. Papal Finance, 1348–1848

The Making of the Papal States

The Role of Public Debt

The Growth of Financial Structures

The Times of Decline

See also

Glossary

Further Reading

Relevant Websites

Chapter 22. Precious Metals and Moneys, 1200–1800

Islamic Market Unification; Chinese Silver Exports During the Mongol Period

Intensification of Chinese Silverization from the Mid-Fifteenth Century

The First Global Cycle of Silver (1540–1640): Bimetallic Ratios and the Silver-for-Gold Trade

The First Global Cycle of Silver (1540–1640): The Role of Japan

The First Global Cycle of Silver (1540–1640): Spanish-American Silver

Globalization’s Sixteenth-Century Birth and Subsequent Ramifications

The Mexican Cycle of Silver (1700–1750) and American Crops and Seeds

Conclusions

References

Chapter 23. Rentes and the European ‘Financial Revolution’

Chief Features of the Modern Financial Revolution

The Geographic Origins of the ‘Financial Revolution’: Public Finances in the Low Countries and France

The Historical Origins of the Rente Contracts: In Private Agricultural Finance

The Usury Doctrine and the Revival of the Anti-Usury Campaign

The Relationship Between Franco-Flemish Urban Rentes and the Anti-Usury Campaign in the Thirteenth Century

The Ecclesiastical Debate About the Usurious or Licit Nature of Rentes

Payments to Rentiers in Later-Medieval Flemish Towns

The Development of a Permanent Funded National Debt in Early-Modern France

The Development of Permanent Funded National Debts in Spain (Castile)

The Public Finances of the Later Medieval Italian City States: Forced Loans

Protestant England and the Usury Question

The Beginnings of the English Financial Revolution, from 1693

Excise Taxes in Funding the English National Debt

The Three Sisters and the English National Debt

The Role of Annuities in the English National Debt (to 1719–20)

The Aftermath of the South Sea Bubble and Pelham’s Conversion: 1721–57

Economic Contributions of the Financial Revolution

See also

Glossary

Appendix Yields on Perpetual Rents, Life Rents, and Loans

References

Chapter 24. Ancient Roman Finance

References

Chapter 25. Spanish Finance, 1348–1700

Introduction

Political Organization

Revenues

Debt

See also

Glossary

Further Reading

Chapter 26. The Financial Revolution in Sweden, 1650–1900

Introduction

The Swedish Financial Revolution

Conclusions

See also

References

Chapter 27. Global Financial Brands and the Underwriting of Foreign Government Debt since 1815

Introduction

Focus, Figures, and Facts

Prospecting

Planning

Placing

Post-Issue Support and Performance

Conclusion: The Global Financial System as a Structured Product

Acknowledgments

References

Relevant Websites

Chapter 28. Venetian Finance, 1400–1797

Revenues

Taxation

Taxpayers

Financial Needs

Public Debt

The Floating Debt

See also

Glossary

Further Reading

Chapter 29. Wars and the International Trading System, 1900–2000

See also

Further Reading

II: Key Market, Institutions, and Infrastructure In Global Finance

Chapter 30. Development of Accounting Standards

United States

United Kingdom, Canada, Australia, France, Germany, and Japan

International Accounting Standards Board

See also

Conclusion

Acknowledgment

Glossary

References

Chapter 31. Contemporary Audit Regulation – Going Global!

Introduction: Audit Regulation

Key Players in the Audit Regulatory Arena

The Global Regulatory Involvement of Audit Firms

The Global Regulatory Involvement of National Professional Accounting Bodies

Audit Regulation and Audit Quality

Regulatory Compliance and Enforcement

Conclusion: Maintaining Public Interest in Global Regulation

See also

Appendix Abbreviations

Further Reading

Relevant Websites

Chapter 32. Justifications for Audits of Financial Statements

Introduction

Justifications for Financial Statement Audits

The Justification for Government Intervention into Auditing

The Implementation of External Audits

Auditing After the Securities Acts

The Structure and Growth of the Industry

Competition Rules Change in the 1970s

Modern Firm Structure

Competing Incentives for Firms in the 1990s

Sarbanes–Oxley Act of 2002

The Future of Auditing

References

Chapter 33. Global Banks and Financial Intermediaries

Introduction

The Standard Model of Banking

Banking in the Postwar Period

The Emergence of a New Banking System

Distinctive Features of Modern Banking

Conclusion

References

Chapter 34. Corporate Governance

Basic Concepts

Corporate Governance as a System

Internal Institutions

External Institutions

References

Chapter 35. Credit Ratings and Credit Rating Agencies

Introduction

Objects of Credit Ratings

Business Models of Credit Rating Agencies

Functions of Credit Ratings and Credit Rating Agencies

Market Structure and Competition

Regulation of Credit Rating Agencies

See also

Further Reading

Chapter 36. Earnings Quality

A Case in Point

What Exactly Is Earnings Quality?

Who Cares About Earnings Quality?

What Affects Earnings Quality?

Can Investors See Through the Quality Veil?

Are Things Getting Better?

And Earnings Quality Around the World?

From Descriptive to Prescriptive: How to Assess Earnings Quality?

Conclusion

Acknowledgments

Further Reading

Chapter 37. Exchanges

Exchanges and Their Evolution

Exchange-Traded Instruments

Organization and Governance of Exchanges

Regulation of Exchanges

Best Execution and the National Market System

Globalization and Transnational Exchanges

Chapter 38. Equity Markets

Definition, Structure, and Functions of Equity Markets

Evolution of Equity Markets

Equity Markets Around the World

Globalization and Localization

The Future of Equity Markets

Glossary

See also

Further Reading

Relevant Websites

Chapter 39. Fair Value and Accounting

Introduction

The Purpose of the Balance Sheet

Fair Value Measurement Standards

Fair Value and Historical Cost Accounting

Assets That Generate Cash Directly

Fair Value and the Financial Crisis

Fair Value and Financial Instruments After the Crisis

Full Fair Value Financial Statements

Conclusion

Glossary

Further Reading

Chapter 40. Fair Value Accounting, Disclosure and Financial Stability

Introduction

The Role of Accounting Standards

How Might FVA Have Exacerbated the Financial Crisis?

See also

References

Chapter 41. Investment Banks

Introduction

Concepts

Origins

Functions and Objectives

Investment Banks and Commercial Banks

Business Streams

Markets in Information and Reputational Capital

Questions, Concerns, and Post-crisis Outcomes

See also

Glossary

Further Reading

Chapter 42. Overview of Islamic Finance

What Is Forbidden (Ḥarām): Gharar (Uncertainty)

What Is Forbidden (Ḥarām): Ribā (Interest)

Legal Devices (Ḥiyal) to Circumvent the Proscriptions on Gharar and Ribā

Islamic Bonds (Ṣukuk) and Securitization

Insurance (Takaful) and Transfers (Ḥawālah)

New Islamic Products: Sharī‘a Compliant Investment Funds

Further Reading

Chapter 43. Loan Markets

Overview

Advantages of Loan Markets to Borrowers

Key National and Regional Loan Markets

Leading Industry Associations

Evolution of the Loan Asset

The Financial Institutions Involved in the Loan Markets

Two Stages of the Loan Cycle: Primary and Secondary

Law, Regulation, and Litigation

The Global Financial Crisis and its Impact on Loan Markets

The Future

See also

Further Reading

Relevant Websites

Chapter 44. Microfinance: Costs, Lending Rates, and Profitability

Introduction

Introduction to Microfinance

High Profitability?

Outreach: The MFI’s Social Mission

Conclusions

References

Further Reading

Relevant Websites

Chapter 45. OTC – Derivative Market

The Over-the-Counter Derivatives Market

Understanding the CDS Market and the Use of CDS Data

Glossary

Appendix: Typical OTC Derivative Position from an SIFI’s Financial Statement

References

Further Reading

Chapter 46. Global Payment and Settlement Systems

Introduction

Foreign Exchange Transactions

Payment System Risk

The Failure to Complete Settlement on Participant’s Default

Conclusion

Further Reading

Chapter 47. Pension Funds

Introduction

What are Pension Plans, Funds, and Firms?

Key Policy Issues with Pension Funds

References

Chapter 48. Project and Asset Finance

Introduction

Project and Asset Finance and Economics

Project Finance

Major Asset Financing: Ships and Aircraft

Endnote

See also

Glossary

Further Reading

Relevant Websites

Chapter 49. Property Rights in an Era of Global Finance

Introduction

The Nature of Property Rights

The Local Origins of Property

Supranational Property Instruments: A General Survey

The Challenge of Globalization: Resource-Specific Comments

Conclusion

References

Chapter 50. Securities Settlement Systems

Definition

The Legal Requirements for Transferring Securities

The Creation of the Contemporary Depository Model

The Legal Characteristics of Settlement in the Currently Dominant, Depository Model

Details

About the Editor-in-Chief

Gerard Caprio

Gerard Caprio is William Brough Professor of Economics and Chair, Center for Development Economics at Williams College. He has served as the Head of Financial Sector Policy at The World Bank and Vice President and Head of Global Economics at J.P. Morgan.

Affiliations and Expertise

Williams College,
Williamstown, MA

Reviews

"Part of a three-volume series dedicated to examining the myriad issues related to financial globalization…this volume addresses the historical and institutional roots of financial globalization and current key institutional elements of current global finance."--Reference and Research Book News, February 2013"In times of turmoil, people seek understanding and composure by looking to the past for guidance. This collection of papers provides an excellent reference in our troubled financial times for investors, analysts, and policy makers. As the first comprehensive attempt to document the world’s monetary past, the volume makes a terrific supplement for courses in financial history."--Richard Steckel, The Ohio State University"The Handbook of Key Global Financial Markets, Institutions, and Infrastructure takes a sweeping view of the history of financial markets and their institutions, which span millennia and includes the rise of fall of empires, republics, and economic and political unions. The volume clearly establishes that many of the recent experiences in financial markets, especially financial crisis, bank internationalisation and government bailouts are not unique to the recent past but have occurred time and time again. The authors of this collection offer rare insights and perspectives on these experiences. Although, the contexts may differ the lessons from history are succinctly explained and interpreted in the modern context. Hopefully the retelling will ensure they are not ignored."--Jonathan A. Batten, Hong Kong University of Science & Technology

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